In this article, we will check out the 10 stocks receiving downgrades from analysts.
Stock markets are under pressure ahead of Jerome Powell’s speech on Wednesday and Beijing’s renewed mobility restrictions. Meanwhile, protests broke out across several big cities in China against the government’s zero-Covid strategy. Apple Inc. (NASDAQ:AAPL) is also in the red following reports which suggested the company would likely miss the production target for iPhone 14 Pro by 6 million. The shortfall is attributed to production delays at its biggest iPhone manufacturing facility in China.
Meanwhile, First Solar, Inc. (NASDAQ:FSLR), Twilio Inc. (NYSE:TWLO) and Aptiv PLC (NYSE:APTV) are also down after receiving downgrades from analysts.
Moreover, analysts also recently lowered their ratings for Chinese EV maker XPeng Inc. (NYSE:XPEV) and sports betting company DraftKings Inc. (NASDAQ:DKNG). Check out the remaining article to see the details of these downgrades.
Photo by Ruben Sukatendel on Unsplash
10. Beyond Meat, Inc. (NASDAQ:BYND)
Number of Hedge Fund Holders: 14
Shares of Beyond Meat, Inc. (NASDAQ:BYND) slid over three percent yesterday after Barclays cut its ratings for the plant-based meat company from “Equal-Weight” to “Underweight.”
Analyst Benjamin Theurer pointed towards a difficult outlook for protein-focused companies, including Beyond Meat, Inc.. He reduced his price target for BYND stock from $13 per share to $10 per share.
Theurer believes price-conscious customers are switching to cheaper protein options and avoiding expensive alternative meat products from companies like Beyond Meat, Inc.. He also predicted a tougher operating environment for the industry over the next few years.
9. Lufax Holding Ltd (NYSE:LU)
Number of Hedge Fund Holders: 14
Shares of Lufax Holding Ltd (NYSE:LU) plunged to a new low on Friday, November 25, after Credit Suisse downgraded the Chinese personal financial services platform from “Neutral” to “Underperform.”
Analyst Frank Zheng was primarily moved by the company’s lower-than-expected results for Q3 and a weak outlook for the full year. Zheng also trimmed his price target for Lufax Holding Ltd from $1.70 per share to $1.40 per share.
Lufax Holding Ltd recently reported earnings of 16 cents per share for Q3, marginally below the consensus of 17 cents. Total net income of $1.86 billion also fell short of $1.99 billion estimated by analysts.
For the full year, Lufax Holding Ltd expects its net profit to drop in the range of 47 – 48 percent on a year-over-year basis.
8. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 20
XPeng Inc. came into the spotlight recently after Jefferies turned bearish on the Chinese electric vehicle (EV) maker. The research firm downgraded XPeng stock from “Hold” to “Sell,” citing intense competition and increasing lithium prices.
Lithium is one of the key elements used in EV batteries. Its prices are currently up nearly 200 percent when compared to the same period of 2021. Jefferies analyst Johnson Wan thinks increasing lithium prices and removal of subsidies for EV manufacturers in China would likely hurt the margins of XPeng Inc..
Wan also pointed towards the higher prices of XPeng cars. Moreover, he reduced his price target for XPeng Inc. from $18.60 per share to $4.20 per share.
7. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 34
Shares of DraftKings Inc. dropped nearly four percent in pre-market trading Monday after JPMorgan cut its ratings for the sports betting company from “Neural” to “Sell.”
JPMorgan analyst Joseph Greff expects DraftKings Inc. shares to move down after their post-earnings rally earlier this month. Greff pointed towards the company’s adjusted EBITDA loss outlook of $575 – $475 million for 2023, which is wider than his estimate of around $350 million. Greff also believes DraftKings will take longer than its competitors to achieve profitability.
Like DraftKings Inc., analysts also cut their ratings for First Solar, Inc., Twilio Inc. and Aptiv PLC.
6. Generac Holdings Inc. (NYSE:GNRC)
Number of Hedge Fund Holders: 36
Argus downgraded Generac Holdings Inc. (NYSE:GNRC) from “Buy” to “Hold” on Friday, November 25, citing supply chain hurdles.
Analyst John Eade thinks supply-chain challenges will impact the company’s margins and revenue in the coming quarters. Nevertheless, Eade expressed optimism about the long-term growth prospects of Generac Holdings Inc..
Separately, investment management Artisan Partners also discussed Generac Holdings Inc. in its third-quarter 2022 investor letter. Here’s what the firm said:
“We pared our exposures to Generac Holdings Inc. (NYSE:GNRC), Azenta and Burlington Stores in Q3. Generac is a provider of residential backup generators in the US with a dominant market position. Our thesis is based on climate change causing more frequent and severe storms and power grid failures, both of which should bolster demand for Generac’s generators. In addition, the company’s residential solar backup battery business—which benefits from Generac’s scale, distribution network and differentiated go-to-market strategy—could also enhance its overall profit cycle potential over time. That said, we believe generator demand may be entering a cyclical downturn as homeowners face inflation and rising interest rates. While our longer term thesis remains intact, we believe a smaller position is warranted.”
5. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Holders: 39
Shares of Aptiv PLC slipped over three percent yesterday morning after receiving a downgrade from Morgan Stanley. The research firm slashed its ratings for the automotive technology supplier from “Overweight” to “Equal Weight.”
Morgan Stanley analyst Adam Jonas was primarily moved by a slower-than-expected pace of EV adoption. Jonas also reduced his sales and margin outlook for Aptiv PLC. Nevertheless, he expressed optimism about the company’s growth prospects in the long term.
4. Williams-Sonoma, Inc. (NYSE:WSM)
Number of Hedge Fund Holders: 40
Shares of Williams-Sonoma, Inc. (NYSE:WSM) slid nearly five percent in mid-day trading Monday after Morgan Stanley turned bearish on the consumer retail company, citing an expected pressure on profitability.
The research firm downgraded Williams-Sonoma, Inc. from “Equal-Weight” to “Underweight.” Analyst Simeon Gutman pointed towards normalizing sales volumes and dropping discretionary spending. He reduced his price target for WSM stock from $150 per share to $100 per share.
The downgrade came a couple of weeks after Williams-Sonoma, Inc. posted mixed results for its fiscal third quarter. Back then, the company said it would not reaffirm or update its financial outlook through 2024 due to macro uncertainty.
3. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 45
Shares of First Solar, Inc. slightly moved down after the opening bell yesterday. The drop followed a downgrade from JPMorgan analyst Mark Strouse, who decreased his ratings for the solar technology company from “Overweight” to “Neutral.”
Strouse referred to the significant gains made by FSLR stock since the approval of the Inflation Reduction Act (IRA) in August. However, he believes there isn’t much room for more gains. The analyst also pointed towards increasing competition that could affect the growth of First Solar, Inc..
FSLR stock has climbed nearly 90 percent so far in 2022. Much of that gain has been attributed to IRA, which offers tax credits to solar-energy equipment buyers. Many believe First Solar, Inc. is a key beneficiary of IRA.
2. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 58
Shares of Twilio Inc. slipped over two percent in mid-day trading Monday after Jefferies lowered its ratings for the digital communications platform from “Buy” to “Hold,” citing persistent near-term growth challenges. The research firm also cut its price target for Twilio stock from $110 per share to $50 per share.
Twilio Inc. reported better-than-expected results for Q3 earlier this month. However, investors seemed disappointed with its soft sales outlook for the current quarter. The company projected revenue of $995 – $1.005 billion for Q4, below analysts’ average estimate of $1.07 billion.
Separately, investment management firm RiverPark Funds discussed Twilio Inc. in its second-quarter 2022 investor letter, stating:
“Twilio Inc. (NYSE:TWLO) offers a full suite of cloud-based communications software, services and tools that allows companies in a wide range of businesses to build omni-channel communications capabilities (video, chat, voice, SMS, fax and email) directly into their customer facing applications without needing to build back-end infrastructure and interfaces. The company also …” (Click Here to read the full text)
1. TransDigm Group Incorporated (NYSE:TDG)
Number of Hedge Fund Holders: 63
Shares of TransDigm Group Incorporated (NYSE:TDG) declined more than four percent yesterday after Wells Fargo dropped its ratings for the aerospace manufacturing company from “Overweight” to “Equal Weight.”
Analyst Matthew Akers cited weakening demand and elevated costs that could slow down the company’s growth. Akers reduced his price target for TransDigm Group Incorporated from $735 per share to $660 per share.
Earlier this year, investment management firm Vulcan Value Partners briefly discussed TransDigm Group Incorporated in its second-quarter 2022 investor letter. Here’s what the firm said:
“TransDigm Group Inc. is an aerospace manufacturing firm that provides highly engineered, niche components for use on commercial and military aircraft. The vast majority of the company’s profits come from aftermarket sales of sole-sourced products. The company produces high levels of free cash flow and has an effective, shareholder-oriented management team who are good capital allocators. Despite the company’s strong results during the quarter and solid outlook, its stock price declined.”
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This article is originally published at Insider Monkey.
